The US Treasury today unveiled a new $5 bill, with security features intended to make it harder to bleach out a $5 and use the paper to counterfeit a $100 bill.

Until about ten years ago, a growing form of counterfeiting was bleaching out $1s and printing $50s or $100s on the paper. For the past ten years, though, new large-denomination notes (but not $1 or $2 bills) have had security features to make this harder:

A watermark that is visible when you hold the bill up to the light, showing an image that matches the portrait.

A security thread embedded in the paper and is visible when you hold the bill up to a light, showing the denomination of the bill and an image that's unique to that bill.

Both the security thread and the watermark are actually part of the paper, meaning that it is impossible to copy them using any sort of printing technique. This provides some real security.

Now that people are getting used to seeing the security features, counterfeiters have started having trouble passing paper that doesn't have them. Since the $1 and $2 bills don't have them, it's no longer practical to use the old bleach-a-$1-bill technique for getting paper for counterfeit hundreds. The $5 bill, though, does have these feaures, and even though it's a more expensive source of paper, counterfeiters have been using them.

The security features on the new $5 have been changed to make that less successful.

Changes

The new $5 has the security thread moved to the right of the portrait, to make it more different from the $100.

The new $5 still has a watermark, but the image has been changed to that of the numeral 5. (Different as the portrait of Lincoln was from that of Franklin, it's certainly true that a 5 is even more different.) There's also a second watermark with three numerals 5, one above the other, to the left of Lincoln's portrait.

The new bill also follows in the footsteps of other new bills by adding color--the new $5 is a pale purple.

You could still fake an old $100 using a $1 bill, but it has gotten to the point where many people will no longer take old $100 bills, because an increasingly large fraction of them are counterfeit--the genuine ones have been taken to banks and exchanged for new ones.

I would certainly look askance at any old $100 bill that anyone tried to give me.

Wow you guys still use that? We've been using polymer notes for 20 years next year in Australia. Significantly harder to forge, four times as resilient as paper so requiring replacement less often and therefore saving the government a mint (pun fully intended).

Despite their advice, if I spotted a counterfeit before I accepted it, I'd refuse it and ask for good money. Otherwise, you're pretty much stuck--it'd be a crime to pass it, and the police aren't going to give you good money for it when they take it away. A local business might reimburse you, if you could convince them that their clerk had really given you a counterfeit, but it would be pretty tough to prove that the counterfeit had come from them.